Russell: Obamas Energy Strategy of Contradiction

Right now, voters across the country are mobilizing around an issue that could determine who wins the 2012 presidential election: energy.

The rising cost of gasoline has influenced the American people to do a double-take on President Barack Obama’s overall energy policy. In light of this election-year scrutiny, it’s no surprise that Obama has tried to defend and define his administration’s energy policy.

But under the public’s watchful eye, the president is continually contradicting himself inside the Beltway and on the campaign trail. Obama calls to expedite infrastructure projects, but in the wake of rejecting the Keystone XL pipeline. Obama claims increased oil and natural gas production on his watch, but then follows up with accusations that oil companies are profiting at the expense of the American people. Obama repeatedly calls for an “all of the above” energy strategy, but then singles out the oil and natural gas industry for new regulations and targeted tax attacks.

Something doesn’t add up. To discover Obama’s real feelings and policies toward American-made energy, we must look to areas that the administration actually has jurisdiction over: public lands, federal agencies and his own calls for legislative action.

Responsible, common-sense regulations on development are a foundation of the oil and natural gas industry’s operations — and rightly so. Protecting the environment and developing our resources must go hand in hand. But right now, under the Obama administration, there are not two, not three, but 11 federal agencies seeking to regulate, study and reassess oil and natural gas production in the United States.

The Environmental Protection Agency, for its part, has been acting like an all-around bully; doing everything it can to smother the industry with one-size-fits-all regulations from Washington, D.C. It disregards the states’ impressive history of successful regulation of hydraulic fracturing. Also, the EPA has been using American tax dollars to conduct studies that distort scientific results to accuse the oil and natural gas industry of harming the environment. These studies have ignored the industry’s incredibly safe record and serve as a rallying cry for the president’s environmental base.

Obama’s State Department rejected the Keystone XL pipeline, which would transport oil from our neighbor Canada and alleviate the oil bottleneck that is causing problems for U.S. producers in Cushing, Okla., and refiners on the Gulf Coast.

And the American people are not amused. A recent Gallup poll revealed that Americans favor the Keystone XL pipeline by a ratio of 2-to-1. On the campaign trail recently, the president tried to backtrack, urging expedited work on the southern leg of Keystone. No matter that his administration has no jurisdiction on this issue: The southern portion of the pipeline could and would have continued without his approval.

Do his federal agencies’ brakes on development mean that Obama is fundamentally hostile to oil and natural gas as fuel sources? The president’s major rebuttal to this claim involves pointing to increased production under his administration. It’s true that the United States is experiencing an impressive increase in oil and natural gas development. But these huge gains are happening because of the advanced technologies U.S. producers utilize on private and state lands, where his federal agencies have limited jurisdiction.

On the other hand, Obama’s record on public lands — where his administration does have control — is far from stellar. Oil and natural gas production on public lands has decreased significantly under his watch. The Interior Department institutes duplicative and expensive regulations that make it impossible for many independent oil and natural gas producers, small American businesses that employ 12 people on average, to conduct business on public lands.

The president’s own punitive legislative proposals offer a stark contrast to his pro-development rhetoric. Obama repeatedly calls on Congress to repeal the “subsidies” that oil companies receive. However, these are neither subsidies nor government handouts. These are typical business deductions, such as labor and construction costs, which many industries have. These provisions, namely intangible drilling costs and percentage depletion, encourage new development of American energy. Eliminating them is a sure way to decrease energy supply and stunt job creation. Singling out the most productive, creative energy industry for targeted tax attacks certainly does not sound like an “all of the above” strategy for U.S. energy.

A recent poll revealed 68 percent of Americans disagree with the way Obama is handling gasoline prices. The public may be taking note of Obama’s energy policy contradictions. The 2012 election may rest upon the question: Can Obama have his energy cake and eat it, too?

Barry Russell is president and CEO of the Independent Petroleum Association of America.